Having started the week in a buoyant mood, investors have lost all confidence in the long-term effectiveness of the agreement struck between Presidents Trump and Xi at the G20, and have been further shaken on Thursday by news that Huawei's Chief Financial Officer, Sabrina Meng Wanzhou, was detained by Canadian authorities at the request of the US government.

Wanzhou has been arrested for allegedly attempting to evade newly-implemented US sanctions that kicked in at the start of November.

At a time when markets are ultra-sensitive to any trade-related news, risk assets have taken a beating on the development.

"The latest bout of anxiety stems from the arrest and planned extradition from Canada to the US of the CFO (and founder's daughter) of Chinese telecom giant Huawei, on allegations of breaching Iran sanctions and suspicions of cyber-espionage," Mike van Dulken, senior markets analyst at Accendo Markets wrote on Thursday morning.

"Having swung between optimism and scepticism about a US-China trade war truce through February, and we note Chinese diplomats making positive noise overnight ('friendly and candid atmosphere' between Xi and Trump), traders are understandably cautious," he added.

Read more: A major pillar of China's economy has passed the 'tipping point' and could slow further, analyst says

Wanzhou's arrest initially spooked Asian investors, with all mainland Chinese and Hong Kong stocks dropping sharply during trading. Hong Kong's Hang Seng was the biggest casualty, losing around 2.5% of its value over the course of the day.

Fears have spread into Europe, and in the first hour of trading all major European indexes are down more than 1%. Here's the scoreboard:

Shanghai Composite closed 1.7% lower at 2,605 points.

Hong Kong's Hang Seng down 2.6% to 26,135 points.

Japan's Nikkei 225 down 1.9% to 21,501.

Germany's DAX lower by 1.8% to 10,995.

Britain's FTSE 100 down 1.6% to 6,814, now lower than it was at the start of 2000.

Markets are so spooked right now that trading on US futures had to be stopped several times overnight after high volatility led to huge price swings.

CME Group had to repeatedly halt trading in US stock futures for brief periods this morning because of violent price moves, in an unusual intervention that has stunned traders. US markets had been closed on Wednesday in a mark of respect for the funeral of former US President George HW Bush, so missed out on the negative price action on the day.

Signs are, however, that US stocks will start where they left off at the close on Tuesday, dropping sharply at the open.

Futures trading, which has now resumed, points to all three major US indexes opening lower by around 1%. Here's the futures scoreboard as of around 8.40 a.m. GMT (3.40 a.m. ET):

S&P 500 futures - down 1%

Dow Jones futures - down 1.2%

Nasdaq futures - down 1.3%

Elsewhere in markets, oil is jittery ahead of a final meeting of the year between OPEC member states in Vienna later in the day.

Member states are expected to agree a cut in oil production levels by around 1.3 to 1.5 million barrels per day, but traders seem unconvinced so far, with both Brent and WTI sliding on Thursday morning.

At the time of writing Brent crude, the international benchmark, is down 0.9% to $60.99 per barrel, while US-centric WTI crude is off 0.81% to $52.46.